Which amongst the following is included in the Capital account of the Balance of payments ? I. Foreign…
The capital account of the balance of payments records changes in foreign assets and liabilities, such as foreign loans (external commercial borrowings, external assistance)…
Choose your answer
Which amongst the following is included in the Capital account of the Balance of payments ?
I. Foreign loans
II. Foreign Direct Investment
III. Private Remittances
Answer and explanation
Correct answer D
The capital account of the balance of payments records changes in foreign assets and liabilities, such as foreign loans (external commercial borrowings, external assistance) and foreign direct and portfolio investment. Private remittances are unilateral transfers recorded under invisibles in the current account, so only I and II belong to the capital account.
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UGC NET Economics